DSM Q4 net profits slump 62% on weak demand, inventory write-offs

18 February 2009 09:28  [Source: ICIS news]

DSM Q4 profits plummetLONDON (ICIS news)--DSM has reported a 62% slump its fourth-quarter net profits to €42m ($53m) from €112m during the same period a year earlier due to a sharp drop in demand, lower margins and inventory write-offs, the Dutch chemicals and life sciences group said on Wednesday.

Net sales for the quarter came in at €2.09bn, down 6% from €2.23bn during the last three months of 2007. Operating profits dropped 35% to €123m from €190m.

“Whilst DSM's life sciences businesses continued to perform well through the fourth quarter, most materials sciences businesses have been severely impacted by the sharp drop in demand,” said Feike Sijbesma, chairman of the managing board.

Compared with the same quarter a year earlier, the results of the performance materials and polymer intermediates divisions were affected by lower sales volumes, lower margins and inventory write-offs, DSM said.

In the base chemicals and materials division, the higher result from DSM Agro more than compensated for the downturn in performance of most of the other businesses in this cluster, the company said.

DSM announced in December that it would cut 1,000 jobs as well as stop salary increases in an attempt to save costs. In its earnings statement, it said these measures would result in total savings of up to €100m per year, to be fully achieved in 2010.

The company said that in its capital expenditure portfolio it would prioritise projects focused on future growth and postpone or delay others.

“DSM will closely monitor the economic downturn and its effect on the company's businesses to assess when further actions should be taken,” DSM said.

In addition, it said that it would not provide a quantitative outlook for 2009 in view of the uncertain economic conditions.

($1 = €0.79)

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By: Hilde Ovrebekk
+44 20 8652 3214

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